A weak SaaS software solution can destroy the business for a channel partner

A weak SaaS software solution can destroy the business for a channel partner more easily than in the traditional license-based software business models. Lets analyze what has changed and what kind of questions a channel partner need to be aware of.

Roles and responsibilities have changed

In the past, the “bits” were delivered to the end user organization and the channel partner could provide local support including the software and hardware. The channel partner was able to be physically present and demonstrate that something was done with the situation.

In today’s SaaS world, the channel partner might not have access to the environment as the ISV in many of the cases maintains the environment. However, this help typically includes only help of the ISV solution environment, but not the infrastructure that is run by organizations such as Microsoft. What has happened is that the distance from the end user organization to the organization that is able to help has grown and includes multiple layers. I have had some experiences of this myself in my own TELLUS organization and blogged about this while back.

Questions that the channel partner might ask

With other words, roles and responsibilities have changed and this has put the channel partner in different role when comparing to the past and how to be able to control different situations. The question that the channel partner will ask is:

  • What kind of SLA (service level agreement) does the ISV give to the channel partner?
  • What kind of SLA does the infrastructure environment provider (such as Microsoft) give to the ISV?
  • What kind of SLA should the channel partner give to the end user organization?
  • What happens if the ISV fails to support the environment and the end user organization sues the channel partner?

Based on my experience on the discussions I have had with tens of software vendors, the question about roles and responsibilities is something that is not obvious to ISV leadership and even to channel partners when negotiating a channel partner agreement.

Horrifying example from the past

I have personally been in a situation with a US-based ISV whose solutions we used to resell and due to many issues with the solution, the end user organization refused to pay for the solution to my organization and the ISV decided to forcefully ask me to pay for the solution even if they ISV was aware of the issues and acknowledged that they would fix the issues that were in the solution. I will never forget the day when that “threat” came by US mail and I stared at the number I was supposed to pay to the ISV. Fortunately I was able to get the customer to agree on payment, pay off to the ISV and then send an official partnership discontinuance letter to the ISV. What I learned from this process is that it is extremely important to define the roles and responsibilities between ISV and channel partner and this also includes responsibilities in payment terms.

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